SC refuses to stop Centre from giving nod to Tata AirAsia deal

The Supreme Court today refused to pass any interim order on a plea seeking to restrain the Centre from granting further approvals to operationalise the USD 30 million deal between Tata Sons and Malaysia-based AirAsia. Reuters File Photo

The Supreme Court today refused to pass any interim order on a plea seeking to restrain the Centre from granting further approvals to operationalise the USD 30 million deal between Tata Sons and Malaysia-based AirAsia.

A bench comprising justices B S Chauhan and A K Sikri, however, made it clear that the Centre's decision on the joint venture will be "subject to the outcome of the case pending in the Delhi High Court".

It also asked the high court to decide the PIL, filed by BJP leader Subramanian Swamy, as early as possible without being influenced by observations made by the high court while dismissing his two interim pleas on the issue.

Swamy has moved the apex court against the February 11 order of the high court by which his two interim applications seeking a stay on grant of further approvals to operationalise the deal were rejected.

The high court, which has fixed the PIL for hearing on March 5, had said that the Centre was not "precluded" from "amending or clarifying" its FDI policy on aviation sector.

"The present petition entails interpretation of the policy by the government which created the policy. It cannot be lost sight of that even if the government was earlier of the view that FDI is to be permitted in existing airlines only, nothing prevented the government from subsequently allowing FDI in a new/proposed airline also and which is neither the subject matter of challenge nor can be the subject matter of judicial review.

"The policy was formulated by the government and the government cannot be precluded from clarifying or amending its policy which is executive in nature...," the high court had said.

Earlier, Swamy, on being ordered by the apex court, had filed the PIL in the high court seeking various reliefs including setting aside of all "approvals/permissions" granted to Tata-AirAsia joint venture.

Later, he also filed two applications seeking interim relief of stay of impugned decision, taken on April 3, 2013, of the Centre and restraining it from granting any further approval/NOC to the joint venture. 

Swamy's PIL opposed clearance to the deal on the ground that according to government policy, foreign direct investment (FDI) up to 49 per cent is allowed in existing airlines which are already in operation and not to new or proposed joint ventures.

According to the consolidated FDI policy, effective from April 10, 2012, no foreign airline was allowed to participate "directly or indirectly in the equity of an Air Transport Undertaking engaged in operating Scheduled and Non Scheduled Air Transport Services except Cargo airlines", he had said.

He said as the domestic private airlines were in dire need of funds for their operations and service upgrade, the government had allowed FDI in existing Indian airlines.

After that decision, the government granted FDI approval to a company, yet to be incorporated, in contrary to FDI policy that had permitted investment only in existing firms, he had said.

The high court, by an interim order, rejected the applications saying that the Centre has the right to "amend or clarify" the policy, which is an executive function.

It, however, kept the PIL pending and had clarified that its observations will have no bearing on the final outcome.

Last April, the Foreign Investment Promotion Board (FIPB) gave clearance to the USD 30 million deal.

AirAsia Berhad, a public listed Malaysian company which operates AirAsia through its wholly-owned investment vehicle Air Asia Investment Ltd, had in February entered into an agreement with Tata Sons Ltd and Telestra Tradeplace Pvt Ltd to set up a joint venture company for passenger airline business in India. 

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